Best Savings Accounts for 2011

After a year or two of quiet, the mammoth online savings account comment thread has come to life again. I conducted that savings account round-up in March 2007, back when banks were offering interest rates as high as 5% for their online savings accounts. GRS readers chimed in with their own favorite savings accounts, and in the four years since I wrote the article, it's received nearly 1750 comments.

But for the past year, the discussion has been quiet. Interest rates are hovering near historic lows, and I've received few questions about saving. That's started to change lately. For example, Stefanie recently wrote with this question:

My husband and I are both young (24 and 23, respectively) and inexperienced when it comes to money marketing. Because we both grew up in frugal homes we know how to save money; we're just not sure what to do with it once we've saved it.

As we set aside a certain amount every month for our housing goal, should we put it in a traditional savings account with our local bank or should we invest it in a money market, CD, or online savings account? We'd be accumulating this amount for the next 15 months or so and then we'd like to withdraw it (so I'd like to avoid any early withdrawal fees).

After we purchase the house, we will be accumulating a considerable amount in our account every month. We could probably go without touching this money for years, so we're interested in the highest-yield accounts/markets. What would you recommend?

I closed my ING account when I found out Capital One bought them. No way am I doing business with those barbarians *again*! Once burned and all that… Now considering Ally among others.

To be honest, I'm curious about alternative online savings accounts too. I've had my savings at ING Direct for the past three years, but are there better options? I spent last Sunday morning sorting through dozens of online savings accounts to find the ones that seemed most promising for Get Rich Slowly readers. I've listed twenty top choices below (though I'm sure I missed a few). All of these accounts are FDIC insured. (You can check whether an online savings account is FDIC insured at the official FDIC institution directory.) All info is current as of 26 June 2011.

Reminder: There's no difference between a money-market account and a savings account. “Money-market account” is simply a marketing term for high-balance/high-yield savings accounts.

Everbank offers high-yield checking and savings accounts with a variety of APYs, including three-month bonus rates of 1.26% for new accounts. The details are too complicated for this post, and there's a $1500 minimum deposit. Click through to learn more.

Incredible Bank is paying 1.21% APY with a $1000 minimum deposit. This is a checking account, not a savings account. If you read the fine print at the Incredible Bank homepage, you'll see there's a money-market account available with similar rates.

SFGI Direct offers a 1.16% APY savings account with a $500 minimum to open (but only a $1 ongoing minimum balance). The SFGI Direct savings account can only link to one external account.

Discover Bank has a 1.15% APY online savings account with a $500 minimum to open.

GRS reader favorite SmartyPig is paying 1.10% APY on the first $50,000 in an account (and 0.50% APY on anything over that). SmartyPig is a goal-oriented savings account that many folks love.

Capital One has an online savings account that pays 1.10% APY on balances over $1000. Under certain conditions (you have a Capital One credit card, for instance), you can earn a 10% bonus on your interest earned.

Perennial favorite ING Direct is paying 1.00% APY with no minimums. ING Direct is the darling of the personal-finance blogosphere. I use them too. But they were recently acquired by Capital One, a company many folks dislike.

American Express offers a 1.00% APY high-yield savings account with no fees and no minimums.

Note: I've listed these from highest APY to lowest. If a bank offers an affiliate program, I've used it. Translation: Get Rich Slowly earns revenue when you open an account at some of these institutions. Affiliate opportunities played no role in the rankings above.

I'll be honest: Times are tough for savers. Interest rates for online savings accounts aren't very exciting right now. The government doesn't want you to park your money in savings; they want you to stimulate the economy by shopping or by putting your money into the stock market.

So, how do you choose the best savings account when interest rates are at all-time lows? Do you still pick an account that offers 1.10% just because it's more than the 0.90% you can get elsewhere? Or do you base your decision on other factors? Which is the best online savings account for 2011? Did I miss your favorite? Share your savings strategy in the comments below.